Britain and the EU have reached agreement on a Brexit divorce bill which is likely to finally total about 50 billion euros ($78 billion), British newspapers are reporting, potentially heralding a breakthrough in the negotiations.

A deal on the bill would signal London and Brussels are moving much closer to an agreement at a summit in December to advance to a new phase in their negotiations and discuss their post-Brexit trade relationship.

The Daily Telegraph newspaper said an agreement in principle had been reached over the EU's demand for a 60 billion euro financial settlement.

It said the final Brexit bill, which was deliberately being left open to interpretation, would be between 45 and 55 billion euros.

A government official cast doubt on the reported numbers, saying: "I do not recognise this account of the negotiations."

The Financial Times said Britain had agreed to assume EU liabilities worth up to 100 billion euros but said net payments over many decades could fall to less than half that amount.

EU officials close to the negotiations stressed that work was still continuing ahead of Prime Minister Theresa May's talks with European Commission President Jean-Claude Juncker and his chief Brexit negotiator Michel Barnier.

But EU diplomats briefed on progress said the British offer was promising and that, on the financial settlement, the two sides were, as one said, "close to a deal".

Nonetheless, others cautioned that Britain had yet to make a fully committed offer and that essential agreement from the other 27 member states could not yet be taken for granted.

The EU set the condition of "significant progress" on three key elements of a withdrawal treaty before it would accede to London's request for negotiations on a free trade pact that could keep business flowing after Brexit in 16 months.

It set a deadline of Monday for that progress to be made if EU leaders were to give a green light at a summit on December 14-15.

On the issue of the rights of EU citizens in Britain, EU negotiators are still pressing Britain to accept that European judges should have a final say on enforcing those rights.

The Sterling rallied about 1 per cent against the US dollar as investors took the reports as a sign the risk of Britain leaving the EU without a deal — widely seen as damaging to the economy — had diminished.

The two sides already believe they are quite close on agreeing to the scope of rights for expatriate citizens in Britain and on the continent.

The EU said any British move needed to come by around that date if leaders at the December summit were to be able to endorse a move to discussions on future trade relations.

'Ireland remains the most difficult issue'

The third key issue for moving to Phase Two, an outline agreement on how to avoid the new EU-UK land border disrupting trade and peace in Northern Ireland, remains a potential stumbling block.

"Ireland remains the most difficult issue," a senior EU diplomat said after Irish Prime Minister, Leo Varadkar, avoided a disruptive snap election when his deputy resigned on Tuesday at the insistence of the party propping up his minority government.

Britain has yet to satisfy EU — including Irish demands that it clarify how it would avoid a "hard border" with customs posts on land between Northern Ireland and the EU.

Many fear that would disturb the fragile peace in the British province.

EU officials say Brussels is willing to work with Ms May to massage those figures in order to help her win backing from hard-line Brexit supporters who have in the past insisted that Britain owes Brussels nothing.

Britain's Financial Times said London agreed to assume liabilities worth up to 100 billion euros, but said net payments over many decades could fall to less than half that amount.

Britain's Brexit Ministry said "intensive talks" were continuing and the two sides were trying to find a way to "build on recent momentum in the talks" to take them to the next stage.

Sterling rallied around 1 per cent against the US dollar as investors took the reports as a sign that the risk of Britain leaving the EU without a deal, which is widely seen as damaging to the economy, had diminished.